T11F-Chp-00-Tst-3-Exm-Sol-Fall-2011

T11F-Chp-00-Tst-3-Exm-Sol-Fall-2011 - Chapter 9 No. Ans....

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Chapter 9 629d7c14acb04a96da8aa02b6ba688ee9c692d9b.xls Page 1 of 5 No. Ans. Chapter 9 Test 3 - 2011 Fall. 1 D Description Amount Values Total Cost for both assets $2,500,000 Fair Market Value of building 1,800,000 90.000% Fair Market Value of land 200,000 10.000% Total Value 2,000,000 100.000% Percentage of value for land 10.000% Basis for Land $250,000 Basis for Building $2,250,000 2 C See example in textbook 3 A Gift received Facts Gain Basis to donor $70,000 FMV at date of gift $100,000 Appreciation $30,000 Gift tax paid by donor $10,000 Percentage appreciation 30% Gift tax added to basis $3,000 Basis to donor $70,000 Basis for gain $73,000 4 B Taxes paid $7,200 Months 12 Per month $600 Remaining months 4 Amount of tax expense $2,400 5 C Dual Basis Gift received Facts Gain Loss Basis to donor $13,000 FMV at date of gift $12,000 Selling price $10,000 $10,000 Basis for gain $13,000 Basis for loss $12,000 Gain (loss) realized $0 ($2,000)
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Chapter 10 629d7c14acb04a96da8aa02b6ba688ee9c692d9b.xls Page 2 of 5 No. An. Description 6 A Date of acquisition 05/02/11 Asset Building Type of asset Office Life 39.0 Convention Mid-Month New property cost $1,200,000 Less: allocation to land ($200,000) Depreciable base $1,000,000 Rate 1.605% Depreciation $16,050 1st year 7 B The following trial balance was prepared for first year of operations (2011), before recording income tax expense for the year. Cash $130,000 Accounts Receivable 90,000 Equipment-placed in service Jan. 2, 2011 50,000 Accumulated Depreciation-Straight Line- 5 yrs 10,000 Common Stock 200,000 Retained Earnings Revenue 290,000 Depreciation Expense 10,000 Utilities and other operating expenses 220,000 Totals $500,000 $500,000 Equipment shown above is ditch digging machine with tax life of 5 years. The company operates in a state that does not have an income tax. Net income above $60,000 Remove depreciation $10,000 Tax return depreciation ($50,000) Taxable income $20,000 $20,000 15% $3,000 $0 25% $0 $0 34% $0 $0 39% $0 Tax Inc. $20,000 Income tax due $3,000 8 C Net income above $60,000 Remove depreciation $10,000 Claim limited depreciation ($50,000) Taxable income $20,000 Difference in depreciation expense ($40,000) Future tax rate 40% Deferred tax liability ($16,000) 9 D Date of acquistion Apr- 2011 Asset Auto Life 5.0 Convention Mid-Year New auto cost $70,000 Percentage business use 75% Business Depreciable base $52,500 MACRS Rate 20.00% MACRS Depreciation $10,500
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This note was uploaded on 03/09/2012 for the course ACCT 4220 taught by Professor Burton during the Spring '08 term at UNC Charlotte.

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T11F-Chp-00-Tst-3-Exm-Sol-Fall-2011 - Chapter 9 No. Ans....

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